ALBION — Should the working citizens of Noble County pay for the new county annex?
Or should it be the county’s property owners?
The Noble County Council is leaning toward the latter — and just may be putting up the Noble County Courthouse as collateral.
During Monday’s joint meeting with the Noble County Commissioners, the council asked its financial consultant to work on a property tax proposal to fund construction of its $12.5 million annex through a lease-rental program.
The county plans on doing away with its Weber Road and South Complex buildings, as well as the two buildings it rents for Noble County Probation and the Noble County Public Defender’s Office. The Noble County Prosecuting Attorney’s Office will be demolished to make way for a 42,000-square foot government annex building.
According to figures provided Monday by the county’s financial consultant, the tax impact on a person who owns a $114,500 home would be an additional $14.48 per year. The additional cost to a business owner is about $43 per each $100,000 of assessed value.
The council made no formal commitment Monday.
In late November, commissioners learned that the next step in its construction of the annex on the block to the west of the Noble County Courthouse was the design development stage, with department heads meeting with the project’s architectural firm, American Structurepoint. During these meetings the department heads would discuss layout of their new office spaces and space requirements in more detail than previously done.
Project manager Zack Smith, the county highway department’s engineer, said the meetings would be held the third week of December.
Financial consultant Jeff Peters, of Peters Municipal Consultants Ltd., presented the county council Monday with two options for securing the money to fund the project — general obligations bonds or through a lease-rental program. The council was then given the option to fund lease payments through a property tax increase or an income tax increase.
Based on state guidelines, Noble County has a general obligation bond limit of approximately $15 million, Peters said. If the county chooses to issue general obligation bonds for the project, it will come close to capping out its maximum borrowing capacity for 20 years.
Under a lease-rental program, the county would still retain the ability to bond for future projects.
One issue with the lease option is that the county could not begin to pay on the principal or interest on its loan until the new building is completed and occupied. If it takes 18 months for this to happen, the county would accrue $750,000 in additional interest costs.
The county could begin to make payments right away — saving that interest money — if it is able to put up collateral. According to Peters, the insured cost to replace the Noble County Courthouse is $15 million, and the state may accept the courthouse value as collateral.
Peters was asked to consult with bond counsel to determine if the courthouse value could be used to allow for immediate payments to be made.
Peters provided an estimate of the tax implications if the county chose to use the income tax formula to raise bond payments.
That figure amounts to approximately $130.98 a year — a little over $5 per paycheck for biweekly wages — in additional CEDIT taxes for a person making the median Noble County income of $52,393.
Peters said if the county used the income tax method, it would mean additional money for all entities which receive CEDIT funding, including the county’s other funds which are affected by the tax.
Potentially, the county could collect enough money to pay for needed renovations to the county courthouse.
The downside to the income tax proposal is that the county could become locked into keeping the income tax in place after the annex has been paid for if another entity which uses CEDIT takes out a bond with CEDIT as its payment revenue source.
Councilman George Bennett said that factor made the property tax option the lesser of two evils.
“Once the obligation is paid for, the tax would go away,” Bennett said. “”We’re anxious to make it go away as quickly as possible.”
Council president Denise Lemmon said she had been approached by citizens concerned that the design for the exterior of the building had been too flashy.
“Taxpayers are more interested in functionality rather than beauty,” Lemmon said.
“You can look good and be cost effective,” Smith said.
He added that just because a building looks nice doesn’t necessarily mean it is more expensive.